Online purchases by Capital Region residents soar but local retail rises as well

B.inspired at 1671 Union St. in Schenectady.
PHOTOGRAPHER:

B.inspired at 1671 Union St. in Schenectady.

Taxable e-commerce sales have jumped 64% in two years across New York state and as much as 88% in Capital Region counties.

State data show that all other categories of taxable sales — everything from hotel stays to industrial equipment to bouquets of flowers — rose just 6.6% from the last quarter in 2019 to the last quarter in 2021. During the same period, the Consumer Price Index rose 8%.

The shift from in-person to online and mail-order sales was likely accelerated by the shutdown of many local retailers during the beginning of the COVID-19 pandemic, in March 2020, and by those retailers’ struggles to retain staff and secure inventory when they reopened.

But for years before, shopping had been migrating away from Main Street and local strip malls to smartphones and computers.

INCREASES BIG AND SMALL

County-level changes between the September-November quarters in 2019 and 2021 are shown below. The larger number is the increase in online and mail-order purchases, the smaller number is the increase in all other purchases:

  • Albany 64.7% 19.6%
  • Columbia 88.1% 30.3%
  • Fulton  82.2% 15.0%
  • Herkimer 82.5% 16.8%
  • Montgomery 83.6% 22.1%
  • Rensselaer 72% 14.3%
  • Saratoga 78.5% 15.5%
  • Schenectady 75.1% 16.1%
  • Schoharie 78.1% 19.9%

All statistics in this report are provided by the state Department of Taxation and Finance via Data.NY.gov. Online purchases are tallied by location of delivery. In-person purchases are tallied by location of sale.

NOT ALL GLOOM

E-commerce is often regarded as the bane of the brick-and-mortar retailer, siphoning revenue away from the merchants in our local communities. 

To add insult to injury, there’s the widespread practice of showrooming — going to a local retailer to check an item out in person, then going online to buy it for less money from a company that doesn’t have to pay to maintain and staff a retail store.

Capital Region Chamber CEO Mark Eagan said online retail has hurt but it’s not all bad, and it’s not the first big threat to local retail.

“I remember back in the ’80s when Walmart was growing, and what a threat it was,” he said. “At first I thought, is Amazon going to be another Walmart?”

But many businesses have used the Internet or Amazon itself to create a new sales channel to supplement their storefront presence. Amazon boasts that more than half of its sales are made by millions of small and medium-sized businesses.

Eagan cited Casa Visco as a local example. Pizza sauce made by the Rotterdam company founded in 1945 is offered for sale on Amazon, where the page for a six-pack of sauce included an advisory Friday: “Only 3 left in stock — order soon.”

“Now [they] can sell anywhere that Amazon sells,” Eagan said.

At nearly $6 a bottle, it’s considerably more expensive on Amazon than on the shelf in a Capital Region market. But delivery is free.

One could, if so inclined, also buy Rad Soap (Glenville) or Saratoga Water Sparkling Water (Saratoga Springs) on Amazon. Beekman 1802 is famous for E-commerce, operating a charming Sharon Springs storefront simultaneously with an online presence that includes HSN, its own website and, of course, Amazon.

Online retail can be a friend rather than a foe, Eagan added, “if businesses are able to embrace it as a tool, instead of just doing what they’ve done. Those who don’t will probably struggle.”

The change is permanent, he added.

Does Eagan miss the past? Probably, he acknowledged.  

“But we can’t go back.”

TOP SELLERS

The following are total sales in the five largest categories of spending in New York in late 2021 and the change from the same quarter of 2019:

  • Restaurants: $10.4B, -1.0%
  • Auto dealers: $8.6B, 11.3%
  • E-commerce/mail order: $7.1B, 63.9%
  • Building materials: $4.6B, 25.5%
  • General merchandise stores: $3.9B, 19%

MIXED RESULTS

Anne Brenner, proprietor of b.inspired on Upper Union Street in Schenectady, moved into Main Street retail later in life, as a second career after working in public health for years on the West Coast.

“I was very gung ho about coming back to the community I came from,” she said of her decision to open her home decor store on Mohawk Avenue in Scotia. In 2020 she relocated to Schenectady to what she hoped would be a better retail zone.

Gross revenue jumped 98% in 2021, Brenner said, due to better location and larger inventory. The pandemic highlighted the need to supplement what she wanted to do — in-person retail as a visible member of the community — with online retail. But it wasn’t an easy shift.

“I think we’ve learned a lot but there’s a whole lot to learn along the way,” she said. She had to pause online sales when supply chain constraints made it too hard for her to guarantee she’d be able to deliver what she was advertising.

She’s getting ready to relaunch, but wants to get it right this time.

“I think for me it’s a real balance right now,” Brenner said. “My goal is never to have just E-commerce because that doesn’t allow me to be the creative person … and yet people have gotten really used to shopping online. So it’s a balance.”

GAINS AND LOSSES

Some trivial tidbits about how money was spent in select Capital Region and Mohawk Valley counties in the most recent quarter:

  • In Albany County, used merchandise stores generated $1.22 million in sales.
  • In Fulton County, beer and liquor specialty retailers narrowly edged out hotels and other accommodations, with $1.97 million in taxable sales vs. $1.96 million.
  • In Montgomery County, which is bisected by a long stretch of the Thruway, gas station sales ($114.8 million) exceeded all of the other 311 retail categories tracked by New York state.
  • In Saratoga County, restaurant sales totaled $115 million, the sixth-highest among the 35 quarters in the state database. The previous quarter — June-August 2021 — was the highest, at $141.4 million.
  • In Schenectady County, taxable spending at auto dealerships ($95 million) was nearly double the tab at restaurants ($53 million).
  • In Schoharie County, which has the fifth-lowest population among the state’s counties, $130.7 million in taxable sales were recorded — fifth-lowest in the state. But spending was 19.9% higher there than two years earlier — 15th largest increase in the state.

KEEPING IT REAL

Most online retailers have bots or actual people to help shoppers make their decisions and complete their transaction. It’s here that storefront retailers can outshine their online competitors.

And this is the strategy at Sondra’s Fine Jewelry.

“People are becoming very loyal to family-run and small businesses,” Sondra Stephens said, and the staff works to earn that loyalty.

The store had a three-month shutdown in the spring of 2020, just like other retailers deemed nonessential.

“When we got back we were very blessed that our employees all came back,” Stephens said. 

The customers returned, too. “I think they’ve got COVID drag, they want to come out,” she said. “We’ve seen a big uptick in bridal business, which I think is wonderful.”

Since opening in 1997, Sondra’s weathered the post-9/11 recession and the larger recession eight years later. But neither was as all-encompassing as COVID.

“We’ve had to reinvent ourselves,” Stephens said, with sanitary precautions in the shop and workarounds for delays in the supply chain.

And through it all they work to keep ahead of the internet by providing a better customer experience.

Clients will come in wanting something they saw online, Stephens said, and “We’ll say ‘We can do that too.’

“Is it harder to get product? Yes.

“Are you changing your bottom line a little? Yes.

“I think everyone on Upper Union Street is doing well. It’s a great little business area.”

OUTSIZED INFLUENCE

Statewide data on taxable sales are impacted heavily by New York City, which was home to 43% of the state population in the most recent Census but which possesses very different spending patterns than the rest of New York, particularly upstate.

For example:

  • New York City saw far more spending per-capita on traveler accommodations than Capital Region counties but less on automobiles and gasoline. 
  • Overall, New York City has been more heavily affected by the pandemic than the rest of the state, particularly in the retail sector, which must pay a premium price there for real estate, labor and other expenses.
  • Taxable expenditures of all kinds were 1.9% higher in New York City in the most recent quarter than two years earlier, but were 8.4% higher in the other 58 counties of the state.
  • In that same time frame, e-commerce and mail-order spending in the five New York City counties increased 51.9% in the two years. Every other county in the state except one saw a larger increase, led by Wayne County at 99.7%.
  • Excluding e-commerce and mail-order retail, taxable spending was actually 0.3% lower in New York City in late 2021 than in late 2019.

LOCAL DESTINATION

Saratoga County ($5.52 billion in taxable spending in the most recent four quarters) has the dual advantage of the highest per-capita income in the Capital Region and a strong tourism trade.

“Not everybody has that same combination,” said Todd Shimkus, president of the Saratoga Chamber of Commerce. “The bottom line is, I believe people spent money in Saratoga last year.”

The Chamber mounted Save Our Locals campaigns in 2020 and 2021 to encourage local spending while merchants scrambled to adapt to the pandemic, Shimkus said, adding online sales, home delivery and curbside pickup to their mix.

Talking anecdotally to retailers, he concluded it seemed to work. “All of them had a great 2021,” he said. “Really slow at the beginning, but as soon as everything opened up it was the Roaring ’20s.”

Without unexpected complicating factors, the positive trend could continue.

Bank managers tell Shimkus that many depositors’ account balances are higher due to federal stimulus money and reduced vacation travel over the past two years. 

“What that means is that people have money to spend,” he said.

Reach John Cropley at [email protected], 518-395-3104 or @cropjohn on Twitter.

Categories: Business, News, Schenectady

1 Comments
niskyperson February 28, 2022
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8% inflation. what does that look like locally, how have local prices changed? what is the local inflation impact across products and services used everyday. you should do a research report on that, interview businesses, how this has had an impact on their prices, supply chain, etc. and families. have local employers been able to adjust wages to address this. are schools and union workers with fixed contracts at a disadvantage when a teacher has a 3% annual increase and 8-10% local inflation?